Among the torrent of executive orders in the first week of the new Trump administration, one stood out that questioned certain tax benefits for manufacturers. The order titled “Unleashing American Energy” paused government agency disbursement of appropriated funds established by the Inflation Reduction Act (IRA).

A memo circulated by the Office of Management and Budget (OMB) provided some clarification as to what programs the order imposes the disbursement pause. The memo states the pause is only applicable to “funds supporting programs, projects, or activities that may be implicated by the policy established in Section 2 of the order.” Section 2 of the order relates primarily to encouraging energy exploration and eliminating the electric vehicle mandate.

The order isn’t specific whether the pause will affect the tax credits established under the IRA, though it seems the credits do not fall under the Section 2 items noted by the OMB. Changes in tax policy generally require congressional action, and we have seen recently that there is Republican support for these tax credits.

A memo from the President regarding a regulatory freeze may impact “midnight rules” put forth to the Office of the Federal Register that have not yet been published in the Federal Register. The IRA manufacturing tax credits may fall under these rules, so it is possible publishing any further guidance related to these credits is unlikely in the short term. For more information or assistance on how to navigate these proposed changes, please contact a member of HBK Manufacturing Solutions at 330-758-8613 or via email at manufacturing@hbkcpa.com.

HBK is not a law firm and cannot provide legal advice to clients.